Did you know about the P.E.A.R (Plumbing, Electric, A/C, Roof) rule?
Its very simple, if any part of the P.E.A.R. has a problem, then financing will be a problem. Keep in mind that the “P” stands for anything water or plumbing related, including the “P” in pool (go ahead and giggle). All of it has to be in working condition in order to be financeable.
Ok, so we don't need Jack Nicholson yelling at us about handling the truth, as in A Few Good Men. But, we do need a reality check before setting out to buy or sell a home.
Keep in mind that real estate is a sales industry. Gimmicky advertising, flashy photos, and fast talkin’ sales agents often come with the business. You have to be able to sift through all the hype to understand the reality of a listing.
Not All Sellers Are Serious About Selling
Just because a property is listed on the market, does not mean that it is actually available. A listing report with little or no description, or with poor or very few photos is usually a good indication that the seller is not serious about selling the home, or more likely that they have a lousy agent.
The Listing Is Only As Good As…
A listing and its report are only as good as those who prepared it. Although the agent is a good target for poor listings, I place just as much blame for a bad MLS report on the broker that actually owns the listing.
One of my pet peeves is lousy photos on a listing report. I’ve never understood why a listing broker would allow an agent to publish a poor report with bad photos and little or no description. That would NOT be a real estate office you want to work with.
If It’s On The Internet It Must Be True!
Along with famous mom quotes like “brush your teeth” and “don’t chew with your mouth open,” we need to add “don’t believe everything you see online.”
I receive so many calls regarding properties found online, and often these listings don’t exist, are under contract, or already closed. These “dummy” listings used by unscrupulous agents to drum up business are an epidemic throughout the internet. You can find them on just about every real estate website, especially Craigslist where there is limited control of what gets posted.
If it’s too good to be true, then it probably is. And, if it’s truly a great deal and property, then there will be countless multiple offers and buyers scrambling to buy it. “Dummy” listings drive new customers to agents, but only at the expense of disappointing the public and breaching their trust.
The freshest and most accurate information regarding the real estate market is found through your local Multiple Listing Service (MLS). Get your agent to set up your search criteria along with automated notifications that are emailed to you the instant a new listing matching your criteria hits the market. If you wait for it to go online, it’s already hours, days, and even weeks old.
Financing Doesn’t Always Mean Financeable
Just because the listing says the seller will consider financing, doesn’t mean that the property can be financed.
I have a simple rule…just remember P.E.A.R (Plumbing, Electric, A/C, Roof). If any part of the P.E.A.R. has a problem, then financing will be a problem. Keep in mind that the “P” stands for anything water or plumbing related, including the “P” in pool (go ahead and giggle). All of it has to be in working condition in order to be financeable.
Many bank-owned properties (REOs) are “cash only” due to their condition. If it needs a lot of work and you are financing your purchase, don’t waste your time looking at it. You will only frustrate yourself.
Cosmetic issues like paint, floors, and curb appeal are really not a lender’s concern. After all, beauty is in the eye of the beholder. Lenders are concerned with the larger issues of a house.
Renovation Loans Are NOT Easy To Obtain
There are renovation loans both FHA and conventional. However, I have previously discussed how difficult they are to obtain and process. The percentage of renovation loans that actually make it to closing are miniscule. They take long to process, and the majority of sellers are not eager to consider your offer if renovation financing is involved.
Watch for Part 2 of Can You Handle The Truth?